Seoul shares hit 2-mth low; POSCO dives on Q4 woes

* POSCO drops 5 pct, hit by ArcelorMittal's Q4 outlook

* Foreign investor net selling hits 2009 high

(Updates to close)

By Seo Eun-kyung

SEOUL, Oct 29 (Reuters) - Seoul shares tumbled for a third straight day to post a two-month closing low on Thursday, with steelmakers and shipbuilders hit hard as renewed woes over the global economy spurred the largest foreign investor net selling this year.

Foreign investors dumped a net 468 billion won ($390.3 million) worth of mainboard shares while picking up 1 trillion won worth of bond futures KTBc1 in a rush to safer assets, with poor U.S. home-related data fuelling fears the economic recovery may quickly lose steam.

"Doubt over the sustainability of the fast economic recovery pace is growing now," said Kim Hak-ju, head of research at Samsung Securities.

Hana Daetoo Securities analyst Lee Young-gon also cited worries about a slower recovery and possible exit strategies.

"Gaining momentum from the fast recovery is weakening and domestic businesses are expected to see a slowdown toward the end of the year, keeping pace with the global economy."